As the mainstream adoption of blockchain has continued to grow, more and more people have begun to find their way into the space without developing at least a basic understanding of this technology and how it works – which can limit its success and profitability.
In order to fully realize the potential of your operation, it is important to first gain a knowledge of the concepts that drive cryptocurrency and blockchain technology. And the root of these concepts are the building blocks of shift logs.
Here's a closer look at what application layers and protocols are, and how layer-one protocols serve as the foundation for scalability and future growth of the crypto world.
What are application layers?
Before we dive into how layers and protocols work in the blockchain space, we first need to understand how application layers work in the computing world.
Application layers – sometimes referred to as layers – are used to mask the finer technical details of a platform while also serving as the main user interface of that platform. Application layers are responsible for hiding a system's operations behind the scenes to make the platform easier to use and less complicated for the end user.
Web development can be seen as an example in this lens, where the underlying code is the primary layer that only the developers understand, while the web pages themselves are the application layer that can be easily used and interacted with by everyone else around the world – regardless of whether they understand how the code works or not.
Blockchain Layers
The same concept can also be applied to blockchain technology, where layers (or layers) are used to establish protocols that define how a particular network works and how users interact within that platform.
Blockchain protocols facilitate the entire exchange of information and dictate all processes within a given network, including:
- Transaktionsvalidierung
- Security
- Interaction of the participating nodes
- And more
Legacy networks such as the Internet and websites have so-called thin protocols and fat applications, where the underlying layer has enormous value, but mostly goes unnoticed by the majority of users of this network.
However, this is reversed in the world of blockchain, with networks having bold protocols and thin applications where most of the value is concentrated at the common protocol level.
Consider, for example, Bitcoin. Despite the massive market capitalization of the network (over .1 trillion at the time of writing), the amount of revenue from applications based on this network remains quite small.
The same could be true for Ethereum At the time of writing, it has a market cap of over 0 billion and thousands of DApps running on the network.
Layer One Protocols
Layer-one protocols – sometimes referred to as implementation layers – refer to a system that is connected to the base or underlying architecture of a blockchain network. The Layer One protocol sets the entire set of rules and parameters for the network, including:
- Konsensalgorithmus
- Blockzeit
- Transaktionsdurchsatz
- And more
In the case of Bitcoin, the layer-one protocol sets the Proof-of-Work-Consensus algorithm and the 10-minute block time, in addition to any other rule that the network and every user in it must follow in order to complete transactions and receive block rewards.
In some cases (like Ethereum), layer one can be preceded by a "layer zero" that lays the foundation for components to support a new layer on top. Binance Smart Chain is a layer-one protocol that is similar to Ethereum at a fundamental level, but built on top of its layer zero to provide lower transactions and higher transaction speeds. For Bitcoin, this layer would include the hardware, the internet, and other components that are combined to create the smooth operation of layer one.
Perhaps the most notable aspect of layer one is that it serves as a foundation on which to build to make improvements to the network that benefit the end user. Any such layer-one solution would directly change the rules of the protocol, such as increasing the amount of data contained in each block or accelerating the speed at which blocks are confirmed to increase the overall throughput of the network.
Stay tuned for future content that delves deeper into the second-layer protocols and how they fit into the blockchain's three-layer protocol ecosystem.